Africa's financial flows: parsing the promise and the plateau
Dario Giuliani
Managing Director at Briter | Building the leading business intelligence for underserved markets | Co-Founder London Africa Network
Over the past few months, I have felt surrounded by buzzwords, concerns, and rushed forecasts. From funding winter to USAID, many have been left wondering what the future of Africa's financial system holds. To attempt a look into the future, I did what I think I do best: I looked at the data, the reality around me, and, ultimately, the past.
The last twenty years have seen a steady drumbeat of headlines declaring Africa as the future: the world’s youngest population, surging urbanisation, smartphone penetration, and a bustling ecosystem of innovators and entrepreneurs. And yet, when you trace the actual numbers behind that narrative, the story becomes more complex — not one of collapse or boom, but of slow, uneven evolutions. And through our work at Briter, tracking investment and business data across the continent, we've tried to provide clarity and context to this complexity up close.
Before diving into the charts, it’s worth noting a broader geopolitical shift underway: the potential dismantling or downsizing of USAID and other major bilateral institutions. My unpopular opinion of the day goes: while these debates often play out in domestic political arenas, their real-world impact in Africa can be overstated. Yes, a sudden drop in aid could weaken certain public programmes in health, education, and infrastructure. But when viewed in context, the total volume of US bilateral aid is small relative to the overall flows into the continent. Some may also argue that this vacuum may create opportunities to build homegrown capacity and defy dependency on overseas capital.
So I got down to work and started looking at what else, beyond venture funding, enters the continent, and I selected three sources: 1) remittances, 2) overseas development assistance, and 3) foreign direct investment. Remittances alone account for over $140B annually, ODA in total exceeds $100B, and FDI remains multiples of venture funding (image below shows that even this apparent steady chart, put at the right scale, shows growth).
So while politically and symbolically significant, the loss of a single donor — even a large one — does not equate to a collapse in Africa's economic viability. In fact, as authors like Moyo, Pritchett, or Easterly have been arguing for two decades, such a shift could even force a reconfiguration of priorities, creating room for local agency, innovation, and investment mechanisms that are less donor-dependent. That remains to be seen, but what we can do now is use data to put these shifts into proper perspective.
The question remains: what structural transformation is all this capital actually enabling?
The numbers don't shout, they speak quietly
Then I took an even higher flight perspective. I added three homegrown data points: GDP, the estimated size of the informal economy, and the top 50 companies' revenues. Now the chart tells two stories. First, even remittances, among the highest sources of external capital into Africa, represents a small percentage in the overall GDP. Second, that Official Development Assistance (ODA), Foreign Direct Investment (FDI), remittances, and venture funding (from our Africa Investment Report 2024) have remained present, even growing in absolute terms over two decades. None of these figures, however, significantly accelerates.
These are not negligible flows. They are constant. But this is precisely the point:
It’s not that the capital isn’t there. It’s that very little — on its own — has been profoundly transformative.
There's more: Africa's real economy remains informal and undercounted
Overlay financial flows and GDP with an additional indicator: the estimated size of the informal economy.
You begin to see an even broader story: that much of Africa’s economic activity lives outside formal data. The informal economy alone is estimated to be worth over $1 trillion, often larger than any official flow except GDP itself.
Digital wallets, mobile payments, and informal trading platforms have added some traceability, but not yet full visibility. And without that visibility, governments struggle to tax these economies effectively. That means less public revenue to fund health, education, and infrastructure — further entrenching weak state capacity. In turn, this fosters a cycle where accountability is elusive, and structures remain vulnerable to inefficiency and corruption. It raises a bigger point:
The African economy is not missing. It’s uncounted.
A due caveat: GDP rises. But per capita?
The story gets more complex once you start peeling back the layers. Without real per capita gains, low fiscal revenue due to a vastly underground economy, no sufficient industrialisation, a growing population may strain already thin public services, increase unemployment, and deepen inequality. The promise of a 'youth dividend' is conditional — and failing to meet that condition turns demographic growth from potential into pressure.
This dissonance matters. Because it challenges the comforting idea that growth (as a number) translates into prosperity.
While the value of products and services grows,the cost of living, inflation, reliance on extractives, and devaluation represent significant constraints for per capita capital accumulation.
So, what are we really seeing?
Looking at the data holistically, it becomes clear: Africa is not being flooded with capital, nor abandoned. It is largely being maintained. Flows exist. Some grow. Others stall. But few translate into structural change.
At the same time, there is an uncomfortable tension in how we analyse all of this. When you walk around Nairobi, Lagos, Dar es Salaam, Lagos or Cairo — especially in the newer developments of New Cairo or Eko Atlantic — you can feel the energy of urban growth. You see cranes, construction, highways, towers, and ambition.
Perhaps we risk being too quick to judge from afar. Development, after all, takes time. Europe and North America took centuries — often built on extractive colonial foundations — to reach their current levels of wealth.
Is it fair to apply the same expectations to African economies only decades into independence, still managing deep historical inequalities and constrained fiscal space? It’s easy to give lessons from ivory towers, forgetting the ladder was already kicked away.
Africa doesn’t necessarily suffer from a lack of inflows—the money is coming: ODA, FDI, remittances, VC. But without the institutional substations and productive infrastructure to absorb and redirect it, that energy dissipates. The problem isn’t simply the current. It’s the conversion. Money enters through aid, investment, and remittances, but too often, it fails to reach the people, sectors, or institutions that could turn it into long-term, self-sustaining change.
Like electricity, capital needs transformers. Without them, it risks being raw voltage.
Where am I going with this?
Perhaps, all I want to say is the following.
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Dario Giuliani
Founder and Managing Director
Sources
Venture funding:
GDP
ODA (Official Development Assistance)
FDI (Foreign Direct Investment)
Remittances
Thank you for sharing your insights on such an important topic. A comprehensive view of financial flows can truly enhance our understanding of Africa's funding landscape and its potential. It's always beneficial to highlight areas for improvement in any analysis.
Senior Manager: Advocacy & Research at Argidius Foundation
4moLove the transformer metaphor, we have been using it to describe the catalytic capital platforms, wholesalers and fund of funds, and emerging local capital providers that collectively are building the financial infrastructure to downscale the raw voltage of large ticket DFI and institutional investments into the array of instruments, products and services firms need along their growth journeys.
Businesses that enable dignity of all people | Building Kilalo
5moVery insightful article. Thanks for sharing Dario!
2X Chief of Staff | All things zero to one.
5moThis is such a timely and well-written piece. And I completely agree, the perception of USAID’s dominance in Africa’s financial landscape often overshadows the reality of its comparatively smaller volume. But beyond the numbers, the real issue is deeper. Financial inflows alone aren’t enough. What’s needed is a more holistic, long-term approach- one that enables structural change and strengthens systems from within.
Growth, Marketing, and Digital Executive ° | I Help Individuals, Firms and Governments Engineer Sustainable Exponential Growth For Their Venture.
5moWell Put Dario Giuliani, Definitely worth reading. Is there a suggested solution to these problems? Would love to read what your perspectives are on how we can really counter issues in Africa.